Legal Ethics Opinion No. 1690
(Compendium Opinion)
Surrender of Files To Former Client Who
Has Failed To Pay Lawyer's Fee
And Reimburse Costs Advanced.
INQUIRY: The large number of prior LEOs, as well as an occasional
lack of uniformity of expression, warrants the issuance of a
compendium opinion which addresses a recurring question: Is it
ethically permissible for a lawyer to retain a former client's
files because the former client has failed or refused to pay the
fees and costs owed the lawyer? This compendium opinion overrules
prior LEOs with respect to their inconsistency with the opinion
expressed herein.
The question arises in various factual contexts. The lawyer
withdraws from representation of the client. The client fires the
lawyer, with or without cause. The former client's new lawyer
wants the files in order to complete the subject of the original
lawyer's representation. The files are germane to a new matter for
which the former client has engaged new counsel. The former
client's new lawyer wants the files to investigate a legal
malpractice claim against the original lawyer. The common thread
is that the original lawyer is owed money for fees or costs, or
both, which the former client has failed or refused to pay.
APPLICABLE DISCIPLINARY RULES: The controlling Disciplinary Rules
are as follows:
DR 2-108(D): Upon termination of representation, a lawyer shall
take reasonable steps for the continued protection of a client's
interests, including giving reasonable notice to the client,
allowing time for employment of other counsel, delivering all
papers and property to which the client is entitled, and refunding
any advance payment of fee that has not been earned. The lawyer
may retain papers relating to the client to the extent permitted by
applicable law.
DR 9-102(B)(4) A lawyer shall: Promptly pay or deliver to the
client or another as requested by such person the funds,
securities, or other properties in the possession of the lawyer
which such person is entitled to receive.
PRIOR RELEVANT LEOs: 352, 374, 431, 871, 996, 1101, 1124, 1157,
1171, 1176, 1305, 1307, 1322, 1332, 1339, 1357, 1366, 1403, 1418,
1485, 1518, and 1544.
OTHER AUTHORITIES: Annot., Attorney's Assertion of Retaining Lien
as Violation of Ethical Code or Rules Governing Professional
Conduct, 69 A.L.R. 4th 974 (1989); 7A C.J.S., Attorney & Client
357 et seq. (1980); 7 Am. Jur. 2d, Attorneys at Law 315 et
seq. (1980); ABA/BNA Lawyers' Manual on Professional Conduct at
41:2101-41:2120 (1992); A Lawyer's Right to Retain Files An Ethics
Analysis, 21 VBA Journal 7 (No. 1 1995); Client Access to a
Lawyer's Files, 8 ALAS Loss Prevention Journal 8 (No. 1 1997).
OPINION: Two distinct lawyers' liens were recognized at common
law: (1) the retaining lien, which permitted lawyers to retain
possession of a client's file until fees and costs were paid, and
(2) the charging lien, which permitted lawyers to give notice of
lien against and be paid from a judgment or settlement recovered
through their legal services. The lawyers' charging lien has
been codified in Virginia to embrace tort-based and contract-based
causes of action. The lawyers' retaining lien has not been
codified, however. Its existence in Virginia common law is based
on Stevens v. Sparks, 205 Va. 128, 135 S.E.2d 140 (1964), and
Bolling v. Bowen, 118 F.2d 59 (4th Cir. 1941). Interestingly, the
evidence presented in those cases did not support the retaining
lien asserted.
Assertion of Retaining Lien
The lawyers' retaining lien is a wholly passive lien; it is not a
cause of action. Nor is there any common law procedure to enforce
or foreclose a retaining lien. It only permits a lawyer to retain
possession of the former client's property until the former client
pays or secures payment of fees and costs due and unpaid. It is
settled that a former client's file is his property.Although the
lawyer's retaining lien is recognized at common law, its assertion
is ethically circumscribed by DR 2-108(D).
Upon termination of representation, a lawyer shall take reasonable
steps for the continued protection of a client's interests,
including . . . delivering all papers and property to which the
client is entitled . . . . The lawyer may retain papers relating
to the client to the extent permitted by applicable law.
(emphasis added.)
The foregoing italicized language clearly authorizes lawyers to
invoke the common law retaining lien. It does so, however, in the
context of the preceding language obligating a lawyer to take
reasonable steps for the continued protection of his former
client's interests, to include "delivering all papers and property
to which the client is entitled." The boundaries of law and ethics
are blurred by language which bows to the retaining lien permitted
by law but simultaneously imposes an ethical restraint on its use.
Ethics committees have wrestled with the dilemma presented by the
conflict between a common law lien and a delimiting ethical
mandate. Some ethics committees have declined to issue opinions on
retaining liens on the grounds that they present questions of law.
Others have issued opinions that it is always unethical to assert
a retaining lien because there is invariably prejudice to the
former client's interests.Still other ethics committees have
proceeded case-to-case: the retaining lien should not be asserted
if it would prejudice the former client's rights. The obvious
point of the retaining lien is to pressure the former client to pay
his bill by depriving him of something he needs, or at least wants
to have. Hence some amorphous "prejudice" to the former client is
a virtual certainty. Some ethics committees have defined the
"prejudice" to the former client which defeats a retaining lien on
his file as prosecution for a serious criminal charge or litigation
involving an important personal liberty.In Virginia some LEOs have
exhibited confusion about whether the retaining lien is subordinate
to the ethical mandate of continued protection of a former client's
interests and about the client's interests that warrant
protection. It is fair to say that over the years the avoidance
of harm to the client's interests has become a controlling
imperative, and that the client's interests warranting continued
protection have been expanded.
A focused analysis of the lawyer's right to withhold his
former client's papers began with LEO No. 1176, dated December 19,
1988:
Even if applicable law permits the attorney to retain
papers relating to the client, the Committee opines that
to do so, under certain circumstances, may be
unreasonable, and thereby violate the first sentence of
DR 2-108(D). That is, under certain circumstances
retention of papers relating to the client may be
inconsistent with taking "reasonable steps for the
continued protection of a client's interests. . . ."
Determination of whether or not retention of papers is
unreasonable, even when permitted by applicable law, can
only be made on a case-by-case basis considering such
things as the ability of the client to pay the fee,
whether the fee is in dispute and the harm to the client
if papers are retained.
A like theme was sounded in LEO No. 1124, dated September 27,
1989, but qualified by an emphasis on "continued protection of the
client's interests."
[I]f there is no dispute about the fees and the client
has had the ability to meet the financial obligation, the
lawyer may assert a retaining lien on the client's files
as security for unpaid legal fees, unless the withholding
of the files would prejudice or damage the client. . . .
While allowing an attorney to "retain papers relating to the
client," the general provision of DR 2-108(D) requires that, upon
termination of representation, the lawyer must take reasonable
steps for the continued protection of the client's interests
(emphasis added). Thus, an attorney must consider the welfare of
the client and whether the retention of the client's files will
materially interfere with the client's subsequent legal
representation, thereby creating a prejudice to the client.
See also LEO No. 1101, dated September 29, 1989.
The ethical restraint on the lawyers' retaining lien was
emphasized further in LEO No. 1322, dated February 27, 1990.
Foremost, upon termination of representation, the
Disciplinary Rule requires a lawyer to take reasonable
steps for the continued protection of a client's
interest, . . . . [E]ven if applicable law permits the
attorney to retain papers relating to the client, such
withholding may be inconsistent with taking "reasonable
steps for the continued protection of a client's
interest."
(emphasis added.)
This compendium opinion expresses the sense of the Committee
that the lawyers' retaining lien, though recognized at common law,
is not ethically permissible whenever its assertion would prejudice
or imperil "the continued protection of a client's interests." The
client's interests warranting continued protection cannot be stated
in an all-encompassing fashion. LEO No. 1124 provides helpful
insight: the lawyer contemplating a retaining lien on his former
client's files must weigh whether it will "materially interfere
with the client's subsequent legal representation." Id. If so,
assertion of the retaining lien would not be ethically permissible.
Subsequent legal representation is not the only client-interest
warranting protection, however. For example, if a former client
needs his file in order to prepare tax returns, assertion of the
retaining lien would not be ethically permissible.
LEO No. 1544, dated October 20, 1993, illustrates the breadth
of the standard of avoidance of prejudice to the former client.
There the former client hired a new lawyer to represent him as to
any claim he might have against his original law firm. The new
lawyer requested a copy of the law firm's file. The law firm had
advanced several thousand dollars in litigation costs. The law firm
wished to retain the former client's files until its litigation
costs were paid. The Committee opined the following:
[I]f such retention [of the former client's files] would
be prejudicial [to the former client], the firm may not
hold the documents for the reimbursement of costs.
Although the facts presented are not sufficient to make
a comprehensive determination of possible prejudice to
the client, the committee believes that the continued
protection of the client may require return of the file.
. . .
[T]he paramount concern still remains the avoidance of prejudice to
the client, and, therefore, regardless of whether the client
reimburses the law firm for litigation costs or pays the firm for
its services, the client is entitled to copies of or possession of
the original file documents if withholding such documents would
prove prejudicial to the client.
It is fair to say, therefore, that the ethical mandate
virtually displaces the common law retaining lien. The ethical
mandate is just that a mandate. It is contained in DR 2-108(D);
the Disciplinary Rules are promulgated by the Virginia Supreme
Court with the force of law. There is ample justification for the
elevation of the ethical mandate over the retaining lien. In the
first place, the lawyer sets the fee and the payment terms,
deposit, and security arrangement at the outset of representation,
and he may decline the representation absent the client's agreement
to the fee and the terms. Having undertaken representation, the
lawyer may withdraw if the client does not perform his payment
obligations. See DR 2-108(B) and (C). Secondly, the lawyer is a
fiduciary who owes undiluted loyalty to his client. Holding a
former client's files hostage does not comport with a lawyer's
post-representation duty to take reasonable steps for the continued
protection of the client's interests. Finally, the lawyers'
retaining lien could well chill a client's interest in giving
important documents to his lawyer and, in turn, impede the lawyer's
effective representation. Neither the profession nor the client is
well-served under those circumstances.
It should be noted, too, that the ramifications of a common
law retaining lien may not have been addressed fully in the
literature. For example, since the lawyer controls the client's
production of documents to him in the representation, does the
retaining lien constitute a financial, business or personal
interest on the lawyer's part under DR 5-101(A) requiring the
client's consent? If so, and the client has not consented after
full and adequate disclosure, does the assertion of a retaining
lien violate DR 5-101(A)?
The retaining lien provides security for payment of fees and
costs. Apparently it is inchoate when representation is accepted
and is perfected when asserted. It is, in any event, one of the
terms of the fee arrangement with the client. Does DR 2-105(A)
require that the retaining lien be "adequately explained" to the
client?
The upshot is that assertion of the lawyer's common law
retaining lien almost invariably will cause (and is designed to
cause) prejudice to the former client's interests in violation of
DR 2-108(D). Assertion of the lien is not ethically permissible,
therefore, whenever doing so will materially prejudice the former
client's interests.
Expense of Copying Clients' Files
A client's file belongs to the client. If the client requests
his file from his former lawyer, the lawyer may at his own expense
make a copy of the file for his office records. The former client
may not be charged the copying expense even if, with his consent,
his former lawyer keeps the original of the file and gives a copy
thereof to him. See LEO No. 1171, dated February 13, 1989, and LEO
No. 1418, dated May 14, 1991.
During the course of representation a lawyer ordinarily sends
copies of pleadings, discovery, and correspondence to his client.
Doing so addresses the lawyer's obligation under DR 6-101(C) to
keep his client reasonably informed. Upon termination of the
representation, DR 2-108(D) triggers a distinct duty to deliver all
papers and property to which the client is entitled. Hence, the
former client is entitled to receive and may not be charged for
copying documents requested that had been sent to him during the
representation where he no longer has those documents. See LEO No.
1366, dated July 24, 1990.
After a lawyer has surrendered so much of the file as the
former client requests, the lawyer has no ethical duty to duplicate
a second copy of the documents without charge. In that
circumstance the former client may be required to bear the copying
expense for a duplication of documents previously surrendered
without charge to the former client.
Copying costs can be avoided, of course, if the lawyer chooses
to surrender the original documents without keeping a copy. The
lawyer may choose to surrender the original documents or copies of
the original documents, except that if withholding the original
documents would entail prejudice to the former client's interests,
the original documents must be surrendered.
Documents to which Client is Entitled
DR 2-108(D) provides that upon termination of representation,
a lawyer is obligated to take reasonable steps for the continued
protection of his former client's interests, including "delivering
all papers and property to which the client is entitled." The
authorities are split over the scope of what the client "is
entitled" to receive from his former lawyer's file even where all
fees and costs have been paid.
One position taken is that the client is entitled to receive
the entire contents of his former lawyer's file without exception.
The "entire contents" position means just that every piece of paper
in the file, as well as electronically stored material such as e-
mail messages, whatever the author, the source, the purpose, or the
message. The "entire contents" position was taken in LEO No. 1366,
dated July 24, 1990, where all fees had been paid. See also LEO
No. 1418, dated May 14, 1991. Another position taken is that a
former client is generally entitled to receive only the lawyer's
"finished product" in addition to the return of papers which the
former client furnished. Hence, the former client is not entitled
to receive (i) the lawyer's so-called workproduct, i.e., recorded
mental impressions, research notes, unfiled pleadings, working
drafts, and internal memoranda, and (ii) administrative materials,
i.e, time and expense records, conflicts of interest memoranda, and
client creditworthiness data. Documents such as the lawyer's
personal research, drafts, and notes of interviews "reflect the
candid, rough and blemished private thoughts of the lawyer [and]
are the tools of the lawyer's trade to which the client has no
entitlement." The ABA Committee on Ethics and Professional
Responsibility articulated a like view in ABA Informal Op. 1376,
dated February 18, 1977:
[T]he lawyer need not deliver his internal notes and
memos which have been generated primarily for his own
purposes in working on the client's problem.
A third position taken is that a lawyer may withhold his
workproduct from his former client if the lawyer has not been paid,
even though he must surrender the rest of the file regardless of
payment. In LEO No. 1171, dated February 13, 1989, LEO No. 1101,
dated September 29, 1989, and LEO No. 1339, dated May 8, 1990, the
Committee observed that the client purchases his lawyer's work
product by the payment of legal fees. The implication from those
opinions is that if the fees are unpaid, the client has not
purchased and thus has no right to receive his former lawyer's
workproduct.
A "no pay, no play" rule has a simplistic appeal. However, DR
2-108(D)'s ethical duty to take steps for the continued protection
of the client's interests does not distinguish between delivering
workproduct and non-workproduct documents to a former client upon
request. "[T]he paramount concern," this Committee premised in LEO
No. 1544, is "the avoidance of prejudice to the client" irrespective
of payment of legal fees and costs advanced. With that premise as
the polestar, workproduct in every form should be surrendered if
withholding it would materially prejudice the former client's
interests. A determination of material prejudice is a fact-
intensive inquiry. It is fair to say, however, that more is
required to establish prejudice with respect to lawyer workproduct
than to client-provided papers. The sense of the Committee is
that, absent exigent circumstances, material prejudice does not
occur simply because the successor lawyer has to create the
workproduct, i.e., research, drafting, memoranda, witness
interviews, etc., contained in the original lawyer's files. Doing
so may be an inconvenience and an expense to the client, yet it
does not rise to the level of material prejudice to the client's
interests in the subsequent representation.
Protocol of File Surrender
A lawyer is permitted to ask a former client to sign a receipt
that describes the documents delivered to the former client from
his file. However, it is not ethically permissible for a lawyer to
refuse to surrender documents until his former client signs a
receipt. See LEO No. 1485, dated February 9, 1993. Nothing in DR
2-108(D) makes a receipt a condition of a former client's right to
receive his file. If a lawyer has a concern about surrendering the
file to his former client, the lawyer may make a copy thereof at
his own expense or, if the file is voluminous, may code the
documents surrendered with a sequential Bates stamp numbering in
order to guard against alterations or substitutions after the
documents are surrendered.
A lawyer is not a permanent storage facility for clients'
closed or retired files, of course. Lawyers routinely "age" files
and destroy them after the expiration of the aged retention period.
Before client files are destroyed the lawyer should follow certain
cautionary guidelines: screen the files to ascertain if they
contain original documents of the client and if so, write to the
client, offer to return the documents in the file, and, if
necessary, explain the significance of documents the client may
later need. See LEO No. 1305 dated November 21, 1989. As a
practical matter, a former client's whereabouts may be unknown
after the lapse of an aging period. Hence, the procedure outlined
in LEO No. 1305 will be more effective if implemented at the
conclusion of representation before the file is closed/retired to
storage and later destruction. The manner of destruction should be
consistent with the lawyer's on-going duty of confidentiality under
DR 4-101(B).
DR 2-108(B) speaks to a lawyer "delivering" the former client's
documents. Depending upon the former client's request, "delivering"
may consist of giving him access to the documents at the lawyer's
office for his review and selection, making the documents available
for pick-up at the lawyer's office, or sending the documents to the
former client by mail, messenger, UPS, etc. "Delivering" is, in
short, a rule of reason under the particular circumstances.
This compendium opinion is advisory only; it is not binding on
any court or tribunal.
Committee Opinion
June 5, 1997
NOTE: The requesting party has requested a reconsideration.
Following their reconsideration, the Committee plans to present
this opinion for Council review.